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Air Serbia records strong 2014 results

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Air Serbia becomes the busiest airline in EX-YU

Air Serbia has become the busiest airline in the former Yugoslavia in 2014, recording a net profit of 2.7 million euros and handling 2.3 million passengers, the carrier’s audited financial results show. The numbers represent the strongest results ever posted by Serbia’s national airline following on from a 73 million euro loss in 2013. Its revenue rose 87% to 262 million euros, while passenger numbers soared 68% compared to the year before. The carrier’s average cabin load factor increased three points, from 64% in 2013 to 67% last year. The growth in loads came despite a 74% increase in capacity. Aviolet, Air Serbia’s dedicated charter brand, carried over 90.000 passengers. Air Serbia Cargo also performed significantly better in 2014, carrying 2.700 tonnes of freight, up 67% on the year before.

Year

PAX (million)

Change (%)

2014

2.3

▲ 68

2013

1.4

▲ 8

2012

1.3

▲ 8

2011

1.2

▲ 14

Commenting on the performance, Air Serbia’s CEO, Dane Kondić said, “These results are a great achievement validating the effectiveness of our strategy. We are proud to have been able to deliver on our mandate which was to achieve strong growth, to become the region’s leading carrier and, most importantly, to do so as a commercially viable and profitable enterprise, while becoming a key driver of economic growth in Serbia”. He added, “The profit we have delivered in 2014 is, above all, a great sign for the future, as it lays a solid foundation going forward and is proof positive, of what can be achieved when the right strategies and governance structures are put in place”.

Airline

PAX (million)

Change (%)

Air Serbia

2.3

▲ 68

Croatia Airlines

1.8

▲ 2

Adria Airways

1.1

▲ 8

Montenegro Airlines

557.000

▼ 5

B&H Airlines

35.600

▲ 17

In 2014 Air Serbia’s on-time performance at Belgrade Nikola Tesla Airport stood at 78%, an increase of 4% compared to the year before. Over the past twelve months, Air Serbia has employed some 400 new staff members and now has a 1.900-strong work-force. The airline’s maintenance department employed 44 engineers and a number of new pilots were hired in the first half of 2014, including three of the carrier's first female captains. The airline's largest ever global drive for pilots was launched last September, which resulted in the recruitment of over forty new pilots by the end of the year.

The CEO of Air Serbia’s part-owner, Etihad, James Hogan, said, “We are delighted with the progress Air Serbia has made in delivering on its performance objectives in the very competitive European market. Its continued success amidst these challenges will depend not only on continued investment in its workforce and in innovative products and services, but also on the ongoing and strict financial discipline and focus on cost which have marked its first year of operation”. Air Serbia is yet to release its financial report to the general public, which has been audited by KPMG.

I like when people begin their comment with; regardless. In other words, I don't care what anyone else writes, my comment stands. What are you worried about? People here will make all sorts of comments 'regardless' of what you say. keep it real buddy. ;-)

Yes but 68% growth is not sustainable in the long run, my guess is that with the planned announcements it should be between 30% and 35%. So who knows, if everything goes according to plan we might even see 3.1.

How can company withjust 67% LFyield so low because of dumping, extra low prices of ticket and on top of that 3 days actions per weekbe profitable?

Of course by „creative“ accounting.

Direct subventions of Serbia to Air Serbia in 2014 was 14 million EURDebt to airport is 15,7 million EUR what was written off.So that makes 30 million EUR. And still just 2,7 million net profit? So, basically that is real 27 million debt.

Can anybody tell me where they put this Belgrade airport debt written off. In income side? Irregular income side? Selling? And those subventions?

There is nothing creative in the accounting. When your liabilities are written off (as part of the international agreement your government signed), your total expenses go down and it positively affects your balance sheet. Namely, you may turn profitable if written off numbers are good enough. You don't need any accounting manipulations.

Is it so hard to accept one such simple thing: government of Serbia supports ASL through cash and non-cash incentives in accordance with the agreement signed with Etihad. This will go on until 31 December 2016 and up until then there is really zero point in discussing the company's profitability, liabilities, revenues etc. They were brought back from the dead less than 18 months ago for god's sake. What kind of 'clean profitability' you expect from an AIRLINE over such a short period?

There is something you keep forgetting and I am not sure whether it is due to hatred or political mission. Either way:

1. It is perfectly normal that we cannot discuss profitability during the period of investments and incentives. The goal is to make ASL profitable AFTER the investments and incentives expire (20 months from now).

2. Had the government decided to leave Jat to its doom and let it die, it would STILL cost Serbia hundreds of millions because Jat's debts would not disappear and someone would have to pay them - guess who? On top of that, there would be lost jobs, overnight 45% drop of passengers at BEG (instead of the new MILLION brought by ASL) and many indirect consequences.

Serbia decided to invest in the long-term salvation of its airline. If you think Jat could have been turned around without huge money behind it, if you think Etihad was supposed to pay someone else's debts and then just pump in another billion because they come from a rich place, if you really think such stuff... then... well, what can I say...

They are profitable thanks to support they receive - and this fully legitimate if there is a coherent plan behind that support and not just plain annual coverage of losses. I would like some of so many 'experts' who comment here to describe how else - except with some help - a small carrier burning tens of millions every year can be turned around and set on a profitable course.

Hmm yes but you also have to consider the number of seats offered, number of destinations and weekly frequencies. Furthermore, don't forget that JU also controls several airport services which also count as its own staff.

Hmm it's actually not bad given the fact that we are looking at first year statistics. Anyone remotely educated knows that you need to wait for about 3 to 5 years before being in a position to evaluate if a company is successful or not.

Of course not. OU is not a role model of good working but still number of employees is much smaller. Other normal companies have much less employee per passengers transported and planes in fleet. I just want to mention that it is very strange number of employees especially that company is profitable with so many employees.

Well, the guy considered Jat tehnika as ASL employees, that pretty much sums it up...

ASL's 1900 staff include AScatering and ASGS. The fact ASL uses the services of Jat tehnika has nothing to do with the number of staff. Jat tehnika is a separate entity with its own employees and it invoices its services to ASL.

This crazy need to prove that ASL is a sinking ship makes less sense every day. Though it is still useful because it fully discredits certain 'industry experts' who regularly visit the blog.

For the past year and a half I have witnessed repeated failed attempts to discredit Air Serbia using similar comments. From "JAT can not be turned around" to "Air Serbia will never be profitable", it is now clear this effort to discredit ASL is a complete failure. It does not even warrant intelligent response any more.

Those who beyond this point continue to believe in Air Serbia failure should be categorized in the same group as UFO believers or Jim Jones disciples. Enjoy your stay at the looney bin!

To further expand on Anon 3:50's message, I have compiled a brief list of reasons why Etihad bought JU, according to a few experts from this very site:

-EY wants control of JU's LHR slots-EY wants access to Serbia's advanced armaments industry-EY wants cheap agricultural land-The Sheikh wants to get rich at the expense of the Serbian tax payer-Arab men seek Serbian virgins to be their brides

AirCEO and Aleksandar,I completely agree with you that some of those comments are funny and out of hand but at the same time the land thing is true ( of course completely unrelated to aviation, ASL, and Etihad)!!!!I have said a number of times that it was not a wise business decision to sell agricultural land and now you are making fun of my perception on something.

I didn't say that Jat Tehnika is in number of Air Serbia emloyee. A contrair, Air Serbia use Jat Tehnika so they have just basic maintenace, but in 900 emloyee is full maintenance staff. As you can not understand normal conversation let me make it simple:

What ASL need to do is: 1. create better night wave which will fill the morning wave from BEG and evening wave to BEG. This will increase LF as we are now that those flight are empty ones. For this ASL doesn't need new planes. They need to have night flights for Sofia,Bucharest ,Tirana also as they have (or they will have ) to Thesaloniki, Athens ,Skopje. It would be great if they have night flights to Sarajevo and Podgorica but those airports doesn't work during night. Also they could put some new destination like Cairo. As we also see they all ready put Tel Aviv to this wave, add Tirana . I will not be supprised if they add second flight to Sofia and Bucharest now when their loads to this cities are much better.2. Add new destination which can be operate by ATR such as Rijeka,Maribor,Bratislava,Krakov,Brno,Graz or on other side new destination in Rumunia , Bulgaria etc. With ATR they could have lower LF but it will increase pax numbers on other destination. Unfortunately for this they need more AtR or they could be operate by their partners.3. Adding more frequency to existing destination such as Berlin, Stuttgart. They need more Airbus or they could utilize more B737.and finale phase 4. Adding more destination such as Hamburg,Lyon, Barcelona, Madrid,Dublin..This what they need to do before starting flights to NorthAmerica and what we could expect during this year.

1. No, night waves are despized in Europe, especially unattractive to business travellers. People avoid them like a plague. Long-overnight flights or long-haul services are a different thing, but getting up at 2AM for a 1 hour connection - will never work.2. ATR fleet cannot handle more flights. Its ageing and reliability reflects its age - just look at BEG.aero and see how many changes occur... new(er) aircraft are necessary for greater utilization - which I agree with you is a must.3. Boeing flying affects the product consistency. While I sypmathize that ownership costs outweigh additional Airbus leases, they need to stick to what they promote - and that is the Airbus.4. Get the house in order first regionally, this is something for the future, with a larger fleet.

Subventions of Serbia to Air Serbia in 2014 was 14 million EURDebt to airport is 15,7 million EUR what was written off.So that makes 30 million EUR. And still just 2,7 million net profit? So, basically that is real 27 million debt. Plus approx. 40 million debt to NIS we are coming to 67 million loss

I agree with you pretty much. It's all about the demagogy of course. Serbia has no any national airline any more. What is not your 49%, you can not say it belongs to you, or what is worse, represent you.

I have a technical question, if someone could help me - how is average Load Factor calculated?Is it the average of all LFs, or is it the number of all occupied seats/number of offered seats? To me it seems it can make a huge difference: e.g. two flights with ATR72 and A320CASE1:(30/66)&(134/155) = LF 45% & LF 86% = av.LF 66%(30/66)+(134/155) = 164/221 = av.LF 74%

Does anyone have any idea how to estimate JU's ANNUAL bill at BEG. Some of the comments above and yesterday are mentioning 15M figure. That's 6% of their total revenue. It can't be that high just for one airport especially considering that they are doing their own ground handling.

Another question is what is actually written off? ASL is supposed to enjoy a 50% discount at BEG so if the airport writes off that discounted payment it would mean ASL's full commercial (non-discounted) liability towards BEG would take 12% of its total revenue.

I had that "premature comment" moment yesterday, commenting on today's blog post day before it was actually posted. So here's an update with today's developments:

Sinisha Mali unofficially (re)announced USA/Canada flights in TV Pink interview from "Serbian Davos" at Kopaonik. He seems to know more about the status of US bilateral than us mere mortals, so he deserves +1 for perfect timing of that announcement.

On the other hand, he did not need to talk about airport debt write-off. Help actually came few hours ago from completely unexpected source: Transparency Serbia NGO. Their fb page contains new post that completely exonerates Air Serbia from any wrongdoing regarding BEG airport discount/debt write-off by shifting the blame game away from Air Serbia to other players. Fingerpointing may continue but without Air Serbia, for them this case is now closed once and for all.

Don't forget that LX has A321 and much more A320's in their fleet. So, during the summer season, they have much more capacity then JU. During winter season, JU has probably close to double the pax that LX has. In the end, ZRH-BEG is a big market and both carriers are doing very well. As a regular traveller on that route, I would say that the LX ticket prices generally are cheaper than JU.

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